Kier lifts full-year guidance on 'resilient' trading
Keir Group upped its full-year guidance on Tuesday, boosted by new business wins.
The infrastructure services specialist said trading since the half-year results had continued to be "resilient". Recent contract awards include a £190m area 3 maintenance and response contract with Highways England, a £50m early works contract for HS2 phase 2a, and an Openreach contract to construct new broadband infrastructure in west and south England as well as Scotland.
As a consequence, final results for the year to 30 June are now forecast to be "moderately ahead" of the board’s previous expectations.
"This reflects strong operational performance, and the confidence we outlined in our half-year results in April," Keir noted.
"These results also reflect the numerous cost savings realised in responding to the reduced volumes caused by Covid-19 during the financial year. The group expects to deliver a full year 2021 adjusted operating profit margin of approximately 3%."
The net debt-cash position at the year-end is also expected to be better than previously expected.
Andrew Davies, chief executive, said: "The group’s proven track record of delivery, and focus on selected markets, coupled with its strong order book and strengthened balance sheet, gives the board confidence in our strategy and the continued success of the group."
Joe Brent, analyst at Liberum, said: "We estimate the order book has fallen £0.5bn to £7.5bn at the full-year, as Kier continued to win work but at a slower pace due to procurement delays. The balance sheet strength has been restored, with strong prospects."
Liberum, which has a ‘buy’ rating on the stock and a target price of 150p, upped its full-year earnings before interest and tax estimate to £99m from £95m. But it also upped its expected net interest charge to £37.2m, "to account for the alignment of accounting treatment of all forward-funding development contracts", and therefore left its pre-tax profit forecast of £62.0m "broadly unchanged".
As at 1100 BST, shares in Kier were trading 1% lower at 128.4p.